Navigate:

What's next on debt limit?

Barack Obama and John Boehner blamed each other for the demise of the debt talks. | AP Photos
Close

In both cases, the Obama-Boehner talks as well as the Gang of Six, the goal was to complete reform by the end of 2012, when the Bush-era tax cuts are due to expire. And to guide this reform, each appeared to rely on a revenue baseline developed by the presidential debt commission last December.

Unlike the more rigid projections used by the Congressional Budget Office, which assumes all the tax cuts expire, the commission baseline sets a more plausible target that assumed some of the more popular would survive. These would include middle-income tax breaks, for example, relief from the alternative minimum tax and a more moderate version of the estate tax cuts now in effect.

Text Size

-

+

reset

As scored by the White House, that baseline is about $36.288 trillion over 10 years, or almost $2.7 trillion under the comparable CBO number.

It is in this range that the bargaining has focused.

Boehner was willing to accept the $36.288 target as the “ceiling” for reform, and that represented a real concession on his part. The number is about $800 billion above what taxes would be if all the current breaks were extended and about $1.4 trillion above the even lower revenue target of $34.9 trillion set by the House budget in April.

At a White House meeting last Sunday, Treasury Secretary Timothy Geithner signed off, Republicans said, on the Boehner proposal — which was a concession in turn by the administration since it had shot for a target closer to $36.7 trillion in prior talks.

With that potential compromise in place, Boehner felt encouraged to proceed with the talks. But circumstances changed, Republicans said, after the Gang of Six came out with its plan that assumed an estimated $37.5 trillion target, or $1.2 trillion in added revenues beyond the commission baseline.

This put the White House is an awkward position since liberal Democrats were sure to demand as much especially with the domestic spending cuts assumed in the Obama-Boehner negotiations.

A GOP leadership aide said as early as Tuesday evening the White House was asking to go up to $36.6 trillion — a number not far off what the president had wanted in earlier talks with Boehner. This, in turn, put the speaker in an awkward situation, requiring him to backtrack and face the wrath of anti-tax tea party forces in his conference.

The administration would argue that the Gang of Six had less impact than Republicans insist. And from the White House perspective, the package was always evolving: as more savings were agreed to, the president needed to balance that politically with more revenues.

The White House said it was never intended to be a make-or-break demand, but more along the lines of hoping for some give on Boehner’s part. Republicans countered that Obama already knew what the speaker’s bottom line was, and Boehner opted not to call back Friday except when he delivered the message that he was walking away.

Readers' Comments (246)

Questions that may lead to solutions but require all citizens to have voice in answers & IF there is no viable answer THEN that question's Money Gets A "Haircut."

1) What is justification for spending Tax-Payer Money in Subsidies To Oil Companies?

2) What is justification for exclusion of impact from "TORT Reform" in Medicare/Medicaid Financial Analysis?

3) What is justification for unintended loopholes in Tax-Code/Tax-Law? (IE ones found by great Lawyers escaping taxes)

4) What is justification for differences in rates paid by Hedge Funds vs Corporate Interest.

5) What is justification for opposition to "Means Testing?" (IE with increase in what we call poverty to current value of $)

6) Can we make Exemptions, Exceptions in Social Security Age Changes? (IE Ditch Diggers are Old at 55)

7) What is (today's) justification for Non-Taxable Status for Religions, Charities, et al?

8) What is justification for restricting government Negotiations with PHARMA? (IE why not get best price?)

9) What is (today's) justification for Military Bases In Each Outside The USA Location? (IE must look at each one)

10) What is justification for opposition to "Partnerships That Create Millions of Jobs." (IE like IBM-NASA)

This is just a start, has some merit, with proper influence could begin process....

My Personal Question: If we can't get it done then "Why Not Vote Up A Raise in Ceiling Until 2013 With Just A Binding Caveat That Mandates Congress Examine These and Other Issues, Gain A Compromise, OR that's the last Increase." (2013 based on truth that we have an election season starting)

Well it seems that by the administrations own admission they DID in fact move the goalposts.

From listening to both camps it is clear that the Gang of Six really changed things. Whether it left Obama personally wanting more in revenue, or Democrats in general howling at the President to do more revenue wise, the administration felt it needed to change course and up the ante tax hike wise.

I do not know if it is the number ($400 billion) that bothered Boehner, or the fact that the goalpost was again moving and perhaps could move more, but he walked away (and rightfully so).

I think the best thing to do, as pathetic as it may seem (and it is pathetic) is to take this to the people in 2012. Go the McConnell-Reid route and let the people decide to either make Washington all Democrat or all Republican in November of next year.

Sadly, over the course of the last 11 years, ever since election night in 2000, this country has been lead by Presidents and versions of Congress that have been and currently are the most polarizing in modern American history. Polarizing leaders in office leads the electorate to vote for equally polarizing individuals to replace them, but representative of the other side of the aisle. This is what lead to a Pelosi lead Congress, an Obama win in 2008, and a Tea Party landslide in the House last year.

We have reached a boiling point in this country where the ideology of our representatives is about to literally tear us apart. We need leaders who can at least speak the same language in the mold of Reagan and Tip O Neil, or Clinton and Newt. Sadly, we have simply had a snowball affect where our leaders are TRULY on opposite sides of the universe. Even those who may be willing to compromise are controlled by those who fit the description of "wingnuts" on both sides of the aisle.

To remedy this, give the President his debt ceiling increase with about $1.5 trillion in cuts (about $900 billion less than the increase amount) and let this lead up to the 2012 election where voters get to decide for one party or the other. It's the only way.

It is an abdication of leadership, and truly political, but the McConnell plan might just be the only saving grace to this whole thing.

First, Congress should pass a clean bill to raise the debt ceiling by several trillion dollars, with no strings attached. The actual amount should be at least equal to the cost of the two Bush wars and the the Bush tax cuts.

Second, any bill to reduce the deficit should focus on the near-term and not include cuts in domestic spending, which would translate into higher unemployment. Instead, all cuts in spending should come from defense, preferably from ending the two Bush wars and bringing home our troops from around the world, from countries such as South Korea, Japan and Europe.

All of the Bush tax cuts should be repealed immediately, followed by even higher taxes on those earning over $500,000 per year.

While there will be some pain in these deficit reduction measures, it would be fair, since the wars gain us nothing, and the rich have benefited enormously from the economic policies (low taxes and free trade) of the past several decades, at the expense of the middle class.

All you have to do is go to C-Span and see the Democrats in 2006 making the same arguments the Republicans are making to day. You can even go back to the 60's and see the exact same arguments. The thing to remember about the government "The more things change the more they stay the same" The American people are just ridiculously stupid and keep putting the same 2 parties(which are actually the same) in power. Until we put people in power that have moral and ethics, things will remain the same. We the American people have the government we deserve!

The loopholes are distortions anyway ?!? How could capitalists possibly support them? What this actually is, is America elected a bunch of people who hate government to run it. Well, you get what you ask for. Reasonable conservatives are going to look back at this as they point in time they balked at the possibility of entitlement reform in exchange for very minor concessions !!

What's Next: Since compromise is unlikely, we will get to August 2nd without a deal which will drive a U.S. rating downgrade and market instability. Blame whichever side you want to, but you should get out of U.S. bonds and think about getting out of stocks. We have a debt problem, but fighting it on the debt ceiling increase is not good strategy. This is a budgeting problem and should be dealt with during the budgeting process. I simply can't understand Boehner's decision to take a stand on the debt ceiling. Right now it looks like all the risk is on the Republican side.

Why is the Government spending too much? It is because the politicians buy votes with their goodies in the tax code. A mother of 3 children earned $22,000 last year and had no Federal Tax Withheld. She received a refund of $7,491, receives $518 in Food Stamps and she probably receives housing assistance. How long can we continue dole this money out to these people who will eventually bankrupt us. To get America on the right track the following is needed – 1- A Balanced Budget Amendment with no gimmicks allowed. 2- An Amendment that forbids Congress to give people a refund for more that they contributed. 3- Elimination of all Federal Pensions – Put their money into the Social Security System with a cap same as the Social Security. 4- Congress must abide by all laws they pass. 5- Congress must spend no more than 90% of expected revenue, 5% goes toward debt and 5% saved for emergencies. 6- Change the Tax code to a flat tax with no deductions

If Moodys and S&P are going to drop the US government's bond rating because the debt ceiling is not raised and NOT because the federal government keeps spending more than the revenue taken in, does that work the same way with individuals?

So if I cannot pay my credit cards and loans minimum payments, my credit rating will go up higher if I take out more loans????? Seems to be the reverse for people.

But, of course, we are the ones who evidentually have to pay off both our own debt and the debt racked up by the government critters. No wonder why we don't have more children - we would be subjecting them to serfdom whose only task in life will be to work to pay off the government debt of today.

Given the events that have taken place Obama appears to be a tool of Reid & Pelosi moving the goalposts when they tell him to.

Obama is the master of the intentional use of the slippery slope argument, he's not going to compromise. It's not that he's a tool of Pelosi or Reid, this is what he does and the sooner people get over denial here, to the left and the right, the better.

Now, Obama was a successful slum lord and sub-standard housing affectionado who gave Chicago tenants some really great leaky and moldy ceilings. He could rent the housing now in foreclosure, hire a few friends and start the Obama Slum Lord Agency,

Obama could dress them like the TSA and they could help with voting matters as well. Fannie and Freddie could be made solvent with this rental scam. And there is some really nice upper end stuff for Michelle's dearest friends to trash between travels to 5 star hotels at your expense.